Roche Accelerates Anti-Obesity Drug Development to Rival Eli Lilly and Novo Nordisk

Roche, a leading Swiss pharmaceutical company, is expediting the development of its anti-obesity drugs to compete with industry giants Eli Lilly and Novo Nordisk in the rapidly expanding market. This move follows the unveiling of promising data for a new weight-loss pill.

Thomas Schinecker, Roche’s CEO, disclosed to the Financial Times that the company’s first anti-obesity treatments are expected to reach the market "significantly faster than people are expecting," potentially by 2028. These treatments, part of an up to $3.1 billion acquisition of biotech firm Carmot Therapeutics last year, include a weight-loss injection entering phase II trials and a pill that demonstrated a 6.1% weight reduction compared to a placebo after four weeks.

The Carmot acquisition could yield approximately seven drugs, with several in early development stages, though Roche has disclosed details for only three assets so far. Recent data from the weight-loss pill boosted Roche's shares by 6% on the day of the announcement, while shares of Novo Nordisk and Eli Lilly declined amid concerns about potential competition from Roche.

Goldman Sachs analysts project that the obesity market will exceed $130 billion by 2030, with multiple companies vying to introduce their treatments. Roche faces the challenge of catching up with established players like Novo Nordisk and Eli Lilly, whose drugs Wegovy and Mounjaro have achieved approximately 15% and 20% weight loss, respectively, in trials lasting over a year.

Other pharmaceutical companies, including Boehringer Ingelheim and Pfizer, are also aiming to enter the obesity drug market. Shares of US biotech Viking Therapeutics surged by 30% after announcing plans to advance an obesity pill to late-stage trials.

Schinecker highlighted the scalability of Roche’s weight-loss pill, which is synthetically manufactured rather than derived from natural peptides, as is the case with Novo Nordisk’s pill. This synthetic approach could potentially streamline production and distribution processes.

Barclays analyst Emily Field remarked that while Roche’s early data is promising, it remains uncertain whether the company can disrupt the head start held by Novo Nordisk and Eli Lilly. "If you look at what’s disclosed, it’s better than pretty much everything at four weeks. But there’s a lot we don’t know," she noted, referring to the lack of detailed information on potential side effects like nausea and vomiting.

Since taking over as CEO in March 2023, Schinecker has overseen a significant restructuring at Roche, including cutting 25% of underperforming drugs in development. The company is now focusing on a more selective but promising portfolio of drugs, including those targeting obesity and Alzheimer’s disease. "That creates room for new starts and things that we can bring in from the outside so that you don’t carry projects for too long and then you find resources that you could put to much more effective use to develop new medicines," Schinecker explained.

Roche’s strategic shift follows a series of research setbacks, such as the recent failure of a late-stage trial for its lung cancer drug tiragolumab to show superior survival rates compared to Merck's Keytruda.

Schinecker expressed optimism that Roche’s obesity drugs might also be used in combination with the company’s other treatments for obesity-related conditions. He highlighted the success of Vabysmo, a blockbuster eye treatment developed with subsidiary Genentech, which generated CHF 1.8 billion ($2.1 billion) in sales in the first half of the year and shows promise in treating diabetic macular edema.

Buoyed by strong sales of Vabysmo and the multiple sclerosis drug Ocrevus, Roche raised its expected earnings per share growth for 2024 to the high single-digit range, up from previous guidance of a mid-single-digit increase.